Aegon to Pay Unit-Linked Policy Costs After Top Court Ruling

Aegon NV sees “tens of millions of euros” in costs to compensate customers after the highest Dutch court said the insurer had overcharged for some unit-linked products sold in the previous century.

The company, the Netherlands’ sixth-biggest individual life insurer, said it will also “pro-actively consider” if further compensation is needed for clients who weren’t plaintiffs in the court case, it said in a statement today.

The Dutch Supreme Court, based in The Hague, today ruled in a case initiated eight years ago by a foundation representing about 30,000 holders of Koersplan unit-linked products, sold from 1989 to 1998. The court said the customers paid excessive premiums and weren’t aware of how much Aegon charged for term life insurance. That lowered the amount of premiums invested.

Aegon will have to pay about 40 million euros ($53 million) in damages to the Koersplan customers who participated in the case, Stichting Koersplandewegkwijt said in a statement on its website today. As many as 700,000 Koersplan policies were sold, the foundation said.

With Koersplan products, customers paid deposits to participate in an investment fund, cover expenses and pay a premium for an embedded life insurance policy.

The Koersplan matter may reduce after-tax income by 150 million euros, The Hague-based Aegon said in its 2012 annual report in March. It hasn’t yet taken a provision for the amount.

The costs come on top of several settlements announced earlier. Aegon last year took a 265 million-euro charge and said it would reduce future costs for customers with unit-linked policies. In 2009, the insurer said it would set aside as much as 250 million euros to settle allegations that it overcharged some customers of unit-linked policies sold before 2008.

Dutch insurers, including ING Groep NV unit Nationale-Nederlanden and state-owned SNS Reaal NV, have set aside about

2.5 billion euros to compensate clients, Finance Minister Jeroen Dijsselbloem said in a June 13 letter to Parliament. The firms settled after the Dutch financial markets regulator said in 2006 insurers didn’t adequately inform clients about charges that reduced the returns on some of the products.

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